Bitcoin Nears $70K Amid Record Open Interest at $40B as Trump-Harris Election Nears

As a seasoned crypto investor with a decade of market experience under my belt, I can confidently say that the recent surge in Bitcoin’s price and the broader crypto market rally is nothing short of exhilarating. The increased open interest in futures contracts indicates a strong influx of new money into the market, a trend that I’ve witnessed before during bull runs. However, it’s important to remember that increased leverage also means increased risk and potential for volatility.

On Monday, the price of Bitcoin (BTC) approached $70,000, with the anticipation surrounding the upcoming U.S. elections fueling optimism among cryptocurrency investors.

Over the last 24 hours, Bitcoin increased by 1.5%, as indicated by CoinDesk data, with a steady upward trend on Sunday. Additionally, the total open interest for USD-denominated bitcoin futures surpassed $40.63 billion over the weekend, reaching an all-time high.

Speaking figuratively, the total number of outstanding Bitcoin contracts stood at a record 592,000 units as of late, a level last seen in December 2022, when the digital currency was trading below $20,000, under a wave of pessimistic market sentiment.

Last week, the cash-margin open interest hit an unprecedented peak, marking a new record. Approximately 40% of this enormous sum, amounting to about $11 billion, was tied to futures contracts traded on the Chicago Mercantile Exchange (CME).

Open interest refers to unsettled futures bets and indicates new money entering the market. A rise in the metric, alongside a price increase, confirms an uptrend.

In the last six trading sessions, approximately $2.4 billion worth of Bitcoin (BTC) has flowed in, following the break of 68k. This influx coincided with an increase in BTC futures Open Interest (OI), which suggests that new long positions are being established. Augustine Fan, head of insights at a crypto wealth management firm named SOFA, stated this to CoinDesk via Telegram on Monday.

At the same time, a significant change was observed in a ratio monitored by CryptoQuant that measures open interest. This ratio jumped from 0.20 to 0.21 as Bitcoin’s price surged $2,000. This increase suggests more people are taking on higher-risk bets related to the asset.

As a researcher, I’ve noticed an uptick in leverage, suggesting a rise in risk appetite among participants. This could potentially lead to heightened market fluctuations and increased liquidations in the forthcoming weeks.

Broader market rally

A jump in bitcoin led to higher prices throughout the crypto market.

Solana’s native token SOL soared by more than 7% due to renewed hype around meme-inspired coins, this time focusing on artificial intelligence. Meanwhile, Ether (ETH), Cardano‘s ADA, BNB Chain’s BNB, and XRP experienced growth of up to 4%. Notably, popular memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB) saw a 3% increase as well.

In the last 24 hours, ApeCoin’s APE experienced a 21% increase, fueling enthusiasm for the launch of its own blockchain network, ApeChain. Traders anticipate that increased usage of APE may occur as tokens are distributed on this new platform. However, it remains to be seen if long-term utilization will be consistent.

Focus on U.S. election

The focus is strongly on the upcoming U.S. presidential election set for November 5th, as investors anticipate an increase in the lead-up period.

As of Monday morning, bettors on Polymarket are predicting a 60% chance for Republican candidate Donald Trump and a 39% probability for Democratic candidate Kamala Harris in their respective races.

In light of the U.S. election results taking center stage, it’s believed that the most advantageous outcome for cryptocurrency could be a Trump victory and a Republican majority in both House and Senate. This would increase the likelihood that the digital asset reform proposals endorsed by Trump and Vance could successfully pass through Congress.

Over the weekend, representatives from QCP Capital in Singapore stated that economic conditions in Japan and China, along with the upcoming U.S. elections, could potentially drive up Bitcoin prices.

As a researcher, I’ve observed a persistent moderate inflation rate in Japan, with headline inflation dropping from 3.0% to 2.5%. This suggests that the Bank of Japan may not be planning to increase interest rates imminently, potentially fueling a surge in the USD/JPY exchange rate, which currently hovers below the 150 mark.

In the meantime, China reduced their key lending rates following the central bank’s decision to lower interests at the end of September. This move is one part of a larger strategy designed to stimulate economic expansion and prevent a downturn in the housing market.

As U.S. stocks near record highs and the Japanese yen weakens further, optimistic investor sentiment is likely to intensify as we draw closer to the U.S. election. This could drive up risky assets and reinforce our belief in a strong performance for bitcoin during October, a traditionally bullish period for the cryptocurrency.